Expert Speak Terra Nova
Published on Oct 10, 2019

Given the United States’ profile of being a major player as a producer, lead technologist and now one of the prominent suppliers of energy, the enhanced Indo–US partnership in the sphere of hydrocarbons would be enriching  for Indian interests.

Towards a more meaningful Indo–US energy partnership

The last one month has proven to be an exciting phase for India’s energy diplomacy. To begin with, India’s Minister of Petroleum and Natural Gas and Steel, Dharmendra Pradhan, visited Saudi Arabia, United Arab Emirates and Qatar in September to cement India’s growing energy partnerships. Almost coinciding with his Petroleum Minister’s visit to these countries, Prime Minister Narendra Modi visited Russia where he attended the 20th India–Russia Annual Summit at Vladivostok and the 5th Eastern Economic Forum. During his visit, the Prime Minister explored possibilities of broadening the scope and depth of energy cooperation with Russia. The India–Russia joint statement issued during this visit provides an interesting glimpse into the evolving cooperation between the two countries especially in the natural gas segment. Further, the joint statement mentioned possibilities of Russian companies working in the domain of domestic pipeline network development and city gas distribution in India.

Recently, during his visit to the United States that closely followed the trip to Russia, Mr. Modi also carried forward the positive momentum on energy diplomacy. During his visit Prime Minister Narendra Modi is also reported to have met with some prominent leaders of US’ companies to deliberate possibilities of deepening cooperation in the hydrocarbon sector. It is reported that a MoU to the tune of $2.5 billion was signed between an Indian and a US company to supply 5 million tonnes of LNG every year for the next four decades. Earlier, it was mentioned by a senior Indian official that India has started importing energy from US to the tune of $4 billion, with plans in place to expand the volume of trade. The growing energy partnership with the US, especially in the field of natural gas, is consistent with India’s stated ambition to build a robust domestic natural gas ecosystem.

The growing energy partnership with the US, especially in the field of natural gas, is consistent with India’s stated ambition to build a robust domestic natural gas ecosystem.

However, referring to the MoU between the Indian and American entity, a report indicated that there seemed to be some lack of clarity pertaining to consumption of gas which the above–mentioned MoU entailed India to purchase. While to an extent the questions about natural gas consumption at this current juncture indeed seems justified given the fact that India’s natural gas segment is yet to take off in a big way, however the evolving cooperation with US and its companies in the LNG segment could prove energy–wise and strategically advantageous for India in the long–term.

To begin with, within India, work is underway to lay the foundations of a thriving gas–based economy. In addition to its inclination for increased usage of the share of natural gas in India’s primary energy mix, the government is also making efforts to construct pipeline infrastructure in different regions of the country. Once the supportive infrastructure takes shape, it will pave way for an increased demand for natural gas throughout the country. It would be interesting to note that the BP Energy Outlook 2018 report observes that India’s consumption of natural gas will nearly “triple” by the year 2040. When that happens, the understanding that India is trying to reach with the US and other energy–rich countries would begin to make sense and will deliver its real worth. Secondly, these long–term energy ties will also enable India to cultivate the long–sought goodwill that can translate into favourable strategic outcomes in the long term.

Partnership with the US, in particular, in the energy sector works well for India in several other ways too. As documented by Daniel Yergin in his book The Prize: The Epic Quest for Oil, Money & Power, the Americans have played a key role in the development of the hydrocarbons industry. While it is true that India and United States have already been engaging in the hydrocarbon sector for a while now, the foundations of a meaningful and sustainable relationship have been truly cemented with the prime minister’s recent Houston visit. When viewed from an institutional perspective, the India–US energy partnership is by far one of the most comprehensively thought out partnership. Reportedly, a US–India Natural Gas Task Force has already been put up to enable conversation and make suggestions to the Government of India to help achieve its objective of India becoming a gas–based economy.

While it is true that India and United States have already been engaging in the hydrocarbon sector for a while now, the foundations of a meaningful and sustainable relationship have been truly cemented with the prime minister’s recent Houston visit.

Additionally, given the United States’ profile of being a major player as a producer, lead technologist and now one of the prominent suppliers of energy, the enhanced Indo–US partnership in the sphere of hydrocarbons would be enriching  for Indian interests. What India must do at this juncture is not merely confine this arrangement to a supplier–consumer relationship, but eventually insist on broadening the scope and depth of this partnership that involves “knowledge transfer”, as suggested by Anurag Mishra and Udai S Mehta in their article for CUTS International. India and the United States should indeed consider exploring the idea of engagement between academia, technology sharing and even joint ventures in developing oil and gas fields. Indian institutions, especially those concerned with geological surveys, oil and gas exploration engineering, energy management etc. must explore the possibilities of strategic tie–ups with universities in the United States.

Time has truly come for the two countries to leverage the evolving energy landscape in their respective countries and seek a more substantial and meaningful energy partnership for the long run.

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